"You Decide" EssayA couple of years ago you inherited a substantial sum of money. This morning one of your second cousins approached you about her struggling day spa business that caters to college students. She would like to borrow $20,000 for a state-of-the-art tanning room for her business. She assures you that the business is steadily growing and promises that you will have your money back in six to nine months at the latest. You are concerned about the day spa's ability to generate sufficient resources to repay the loan. What financial ratios can you examine to assess the short-term liquidity of your cousin's day spa? Provide the formula for each ratio.
What will be an ideal response?
Short-term liquidity ratios, which compare some combination of current assets or operations to current liabilities, include the current and quick ratios, the cash ratio, and the operating cash flow ratio. The formulas are provided below:
1.
2.
3.
4.
1.
2.
3.
4.
Business
You might also like to view...
Obesity is associated with all of the following EXCEPT ______.
a. heart disease. b. stroke. c. cancer. d. job performance.
Business
For a department store such as Macy's, the most likely need for short-term financing will be for
A) inventory. B) employee wages. C) extending credit policies. D) new locations. E) additional cash registers.
Business
In an alternation rank order procedure, employees are simply ranked from the best performer to the worst performer
Indicate whether the statement is true or false
Business
Cognitive ability tests are one of the least valid selection methods
Indicate whether the statement is true or false
Business